Cincinnati City Council Votes to Keep Property Tax Rollback

Despite a recommendation from the city manager, the city will forego roughly $5 million in revenue by keeping an unusual policy of collecting a set $29 million in property taxes.

click to enlarge Cincinnati City Hall - Nick Swartsell
Nick Swartsell
Cincinnati City Hall

Cincinnati City Council voted today that this year won't be the year the city jettisons its unusual property tax rollback.

For the last 20 years, the city has set the millage on its property tax collections so that it collects a fixed sum — about $29 million — instead of collecting property taxes at the maximum 6.1 mill rate approved by voters. The so-called "rollback" is the result of a push by conservative council members and activists at the time.

Effectively, that means a tax break for property owners in the city and less revenue for city operations.

With the city facing an estimated $7 million to $12 million budget deficit in the coming fiscal year starting in July, Cincinnati City Manager Patrick Duhaney has suggested the city collect at the full 6.1 mill rate.

But council's Budget and Finance Committee earlier this week opted to keep the city's so-called "rollback," saying the city's property taxes are already too high. The full council approved that option today.

The higher rate would have raised roughly $5 million extra in calendar year 2021. Currently, the city of Cincinnati has about $5.6 billion in property value within the city limits, though that is expected to drop by $33 million next year as people challenge their property valuations. 

In committee, Councilmember Chris Seelbach voted with Councilmember David Mann to end the city's property tax rollback, but did acknowledge property taxes are too high. He blamed that, however, on the fact that the city's earnings tax is too low.

The city gets most of its revenue — about $296 million — from its 2.1 percent earnings tax. Seelbach said that the city's earnings tax is a better place to look for increased revenue.

Councilmember P.G. Sittenfeld supports keeping the rollback.

"Among the ingredients that create the condition where people want to live here and job creators want to move here is lower property taxes," Sittenfeld said today. "This ($5 million from the elimination of the rollback) is a pittance compared to what we should be striving toward, and that's when these budgetary discussions will go away."

Meanwhile, in what has become a yearly budget ritual, some council members blamed the State of Ohio's cuts to its local government fund for the city's deficit. 

Cincinnati used to get $21 million a year from that fund, which comes from state sales taxes. Now, however, the city gets just $14.1 million. That's up slightly from a couple years ago, when the city got $12 million, but still far from the amount the city once received before cuts to the fund started in 2011.

Seelbach has also blasted a new move by the state that prohibits cities from taxing agreements called supplemental executive retirement plans, or SERPS. The state and federal governments can still tax those plans, but starting next year, the city will not be able to. That will cost Cincinnati between $250,000 and $500,000 next year, city administration estimates.

"It's not because of our own doing that we have deficits every year," Seelbach said today, pointing out the city has had to make cuts to various services. "I believe we've helped turn the city around. But the state isn't being a good partner... therefore, we have to come up with new revenue sources. If there are other solutions other people have, I'm open to whatever the solution is."

Seelbach says he's suggested several new revenue sources, including taxing revenue on surface parking lots in the city.

The city estimates it will receive $438 million in revenue in the coming fiscal year, but will need to spend $445 million.

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